The purpose of this study is to explain the current status of state-run enterprise management. 24 years have passed since North Korea's economic crisis erupted in the early 1990s. If one considers the current North Korean economy has deviated tremendo...
The purpose of this study is to explain the current status of state-run enterprise management. 24 years have passed since North Korea's economic crisis erupted in the early 1990s. If one considers the current North Korean economy has deviated tremendously from traditional socialist planned economy, one can imagine the operation and management of state-run enterprises will look much different from the socialist planned economy era. Above all, the autonomy of enterprises has considerably expanded. In addition, there are increases in market economic activity of enterprises and interest in profits and profitability with the introduction of concept of competition. With the increasing infusion of private capital, small-scale privatization is already in progress in some areas. There are changes also occurring in corporate governance. While the legal ownership of the company belongs to an external party (i.e. the state) with the lack of external control mechanism, internal members are able to acquire significant degree of control over the company and the insider control phenomenon is becoming increasingly evident. Accordingly, vanishing of public property is becoming more conspicuous over time. The changes in enterprise operations occurred from the early 1990s due to the economic crisis. Initially, this occurrence was observed partially in unofficial sec-tors, but after the July 1 Economic Management Improvement Measures were installed in 2002-where unofficial economic activities of companies were legalized in certain areas-informal economic activities of enterprises began to be widely witnessed in official sectors. However, this phenomenon is accelerating recently with "Our Method of Economic Management" that went into test operation since 2012. However, much of the market economy-related activities, still in the large part are being developed in the informal economic areas. North Korea's economic reform measures are currently occurring under a low level of institutionalization. Therefore, business management is still a concoction of planned and market and formal and informal economy. However, the overlap between plan and market, formal and informal, and legal and illegal continues to expand over time. In addition, the changes in business management in North Korea are unevenly developed according to the industry and by companies. While certain industry and enterprise continue to maintain the structures of planned economy and managing and distributing resources according to state orders, there are some industries and enterprises that elude state control and secured almost complete autonomy. Furthermore, between the extreme ends of planned and market economy and formal and informal boundaries, a wide variety of combination are being formed creating a broad spectrum of configuration.